UK companies should act now to make sure their brands
are not damaged by climate change, according to a study
from the Carbon Trust. Airlines and food and drinks companies are at particular
risk, it warns, with 50% and 10% respectively of their market value potentially
threatened.
"Brand value will be affected [by climate change] but as yet we don't
know to what extent," says Tom Delay, chief executive of the Carbon Trust,
a company funded by the UK government to help businesses and the public sector
cut greenhouse gas emissions. "What is certain is that business needs to
start thinking about it now. This report is a real attempt to quantify the impact
on brand that climate change may have."
The study – carried out for the Carbon Trust by Lippincott Mercer, a
US-based brand consultancy – says that climate change could be "a
mainstream consumer issue" by 2010. When this happens, there will be "reputational
implications for many sectors not seen to be addressing the issue appropriately,"
it continues.
Of the six sectors – airlines, food and drink manufacturing, food retailing,
telecommunications, oil and gas, and banking – aviation faces the biggest
potential risk, the report finds.
This is because of the significant effect that aeroplanes have on the climate,
the extent to which airlines rely on their brands, and the potential for customers
to switch companies on the basis of their approach to climate change, says the
report.
Food and beverage production is less carbon intensive, but customers spend
a greater percentage of their annual income on these kinds of products. Again,
the importance of brand reputation, and the potential for customers to switch
suppliers easily, means that the sector is particularly at risk, finds the report.
Other sectors could lose between 1 and 2.5% of their market value, but these
figures still represent significant value at stake, says the report. For instance,
the banking sector may only have 1-2% of its market value at risk, but when
this is calculated for all the companies in the FTSE All Share, the total figure
is £5.7 billion.
Furthermore, "even in the 'low carbon' sectors of banking and telecommunications,
where direct emissions from operations do not create brand risk, there are opportunities
for companies to create positive brand value if they position themselves appropriately
on the climate change issues that affect their customers, rather than their
own operations," adds the report.
Given the length of time that may be required to respond to customers' concerns
about climate change – for instance in the aviation sector, which might
have to replace its fleet – the study suggests that "action is needed
now".
download the study
from the Carbon Trust
Source: Environmental Finance
